Premiums for the "benchmark" Affordable Care Act silver plan were lower in 2016 than analysts at the Congressional Budget Office originally expected, according to a new analysis by the Kaiser Family Foundation.
Researchers found premiums in 17 cities for the second-lowest-cost silver plan to be an average of $4,583, 12 percent lower than official CBO projections. Narrower provider networks and strong marketplace competition have contributed to lower premiums, says the KFF analysis.
Based on insurer rate requests so far in cities where data is available, the cost of the second-lowest silver plan will increase by a weighted average of 9 percent in 2017, the analysis says, in part due to the sunset of the reinsurance program.
A key component of whether the ACA stays on pace to reduce the federal deficit is determined by how actual premiums compare to CBO expectations. The report adds that even with a 9 percent increase, premiums would stay, on average, below CBO projections.
Underpricing from many insurers due to uncertainty about the health of enrollees led only one-third of insurers to turn a profit on their marketplace plans during the first full year of the ACA, a previous issue brief said.
But the 2017 premium increases are more of a temporary market correction than a trend, the KFF report says. Indeed, now that insurers have more data on the populations they are serving on the exchanges, market stabilization is expected. Still, higher premiums do not guarantee that every insurer will profit, especially ones that have lost money so far.
- read the KFF analysis